Last week, the country’s first known state-level law regulating college partnerships with online-program managers went into effect.
The Minnesota law applies to more than 30 public colleges in the state’s system that — on or after July 1 — have a contract with for-profit OPMs when the services provided include recruitment and marketing. Among other things, the law stipulates that contracts can’t include or allow for tuition sharing and can’t grant an OPM ownership over faculty members’ intellectual property. A college working with an OPM will also have to submit an annual analysis of the partnership to specified committees in the state legislature.
OPMs have historically allowed colleges to quickly deliver and expand online programs — a particularly attractive prospect for institutions desperate to establish new channels of enrollment. But these arrangements, especially those where a college shares tuition revenue with the OPM, have come under fire in recent years amid reported instances of predatory and deceptive recruiting practices and low-quality programming.
Government intervention, to date, has largely been stymied. The U.S. Education Department has delayed plans to expand regulatory oversight of third-party vendors like OPMs after a failed attempt in early 2023, and also hasn’t returned to the question of whether to rescind 2011 guidance that gave rise to the OPM industry. At the state level, legislators in New Jersey and California have both introduced regulatory bills that died in committee. (A spokesperson for the National Conference of State Legislatures wrote in an email that, to his knowledge, no other state bills were in the pipeline.)
Administrators and consultants around the country, then, “will be watching Minnesota closely” to see how this plays out, Noah Sudow, a senior vice president at Whiteboard Advisors, told the online higher-ed marketing magazine Volt in June.
Why now, though, and why Minnesota? For Rep. Nathan Coulter, a Democrat who first introduced the legislation in the House, it was a proactive move to protect students, staff, and taxpayers. He recently spoke to The Chronicle about the legislation’s genesis, the response it received, and how he thinks colleges can increase enrollment. This interview has been edited for length and clarity.
How did this legislation come about?
Last summer I was just scrolling through Twitter [now called X] one day and saw a link to this [U.S. Government Accountability Office] report that came out two years ago. I had never heard of OPMs until I read that. And so I just started asking questions. I reached out to our research staff at the Minnesota House and reached out to some folks in the Minnesota State [system]. What’s going on? Are there these partnerships in Minnesota? I discovered that there were some partnerships, and one of them that had proven to be a little more problematic was a partnership between St. Cloud State University and an online-program manager.
We want to allow room for innovation. What we don’t want is what we’ve seen in some other states, where schools have been sold a bill of goods and it ends up hurting them.
[St. Cloud State’s multimillion contract with the online-program manager Academic Partnerships — which recently rebranded as Risepoint — reportedly includes a 50-50 revenue-share arrangement, and has attracted criticism as the institution weathers academic programming and faculty cuts.]
The primary concern from faculty and staff there was the amount of tuition dollars that were going to these programs, the lack of control that staff and faculty felt with regard to the programs, and the lack of transparency on the nature of the contract.
I was also thinking about the work that we did in our higher-education budget last year. We fully funded a tuition freeze for every Minnesota State college and university. And we also passed the North Star Promise program, which, starting this coming academic year, will completely cover tuition and fees for any student from a family making $80,000 or less at any public college or university in the state. And so where my thought process led me was, “We put a lot of money into our colleges and universities. Let’s make sure that we’re being accountable.”
OPMs can assist colleges with a number of offerings: degree programs, bootcamps, credentials, individual courses. What’s the real target here?
It pretty much covers any partnership with an OPM that a public school might enter into. The focus of the legislation is to rein in what I would say are predatory and pernicious practices, and bring transparency. If there’s a contract that a public institution is entering into, there needs to be that public accountability.
That actually speaks to another question I had. Do you consider yourself anti-OPM, or more just pro-responsible partnerships?
I would classify myself as an OPM skeptic.
There have been experiences with schools in Minnesota that have been pretty positive. One example would be Southwest Minnesota State University; it’s had what seems to be a pretty positive experience with Academic Partnerships. So the goal is not to say, “Well, tough luck. We don’t want OPMs in the state of Minnesota.” We want to allow room for innovation. What we don’t want is what we’ve seen in some other states, where schools have been sold a bill of goods and it ends up hurting them — and more importantly, it ends up leaving a lot of students in some pretty bad positions.
Did this legislation receive any resistance — and if so, what were the concerns raised?
The ban on tuition sharing was probably the biggest sticking point.
We certainly got pushback on this from Academic Partnerships. And part of the reason I kind of dug in on that point was that every time I asked the question of, “How can you not do this on a fee-for-service model?” I never got what I would say was a satisfactory answer.
The reason that fee-for-service makes much more sense is that it is a knowable number. It is a concrete, written-out number that would be included in any contract that would have to be publicly vetted.
I’m far from an expert on OPM business models, but I find it extremely hard to believe that no one could make a go of it in the state of Minnesota with the new regulations that we passed.
[Representatives for St. Cloud State and AP, now Risepoint, told Inside Higher Ed in April that banning the revenue-share model could hinder small colleges from operating online programs.]
A few other states have tried, and failed, to pass similar legislation. Why do you think Minnesota was able to?
At the risk of speculating, I feel like part of what we were able to do — not that we were hiding anything — was to run under the radar for a while. What happened in California with some OPMs generated significant press coverage and even generated a lawsuit. So I think OPMs were just a little more aware of what was happening in California. And California obviously has a much larger student population in their public colleges and universities.
I would say as well — and I don’t want to frame this as something that other states don’t have — but we in Minnesota were fortunate to have higher-education chairs in both the House and the Senate who saw what was happening and really felt like this was an important action to take. I am very thankful to Rep. [Gene] Pelowski and Sen. [Omar] Fateh for that recognition.
Many colleges turn to OPMs with hopes of increasing enrollment. What do you see as the viable alternatives to drawing students?
There are a lot of reasons why folks either don’t go to college or go to college and drop out, right? And chief among them is cost.
The fact is that for years in Minnesota, we were — to use a loaded term — “defunding” higher education. There were years where funding was flat, and those costs don’t just go away. They most of the time ended up just going into tuition increases. So we need to have a sort of take-all-comers approach to addressing these challenges. It comes down to keeping costs affordable for regular folks. And we took action on that.